Business enthusiasm tapering in Hawaii

Corporate confidence has returned to the levels of 2003, a new Bank of Hawaii survey finds

Hawaii businesses are confident about the next 12 months but have tempered their enthusiasm from the last two years as higher energy prices, a labor shortage and a slower housing market have reined in the economy.

More than five out of six, or 85.2 percent, of those polled do not anticipate lower levels of economic activity for Hawaii, according to Bank of Hawaii's August 2006 semiannual survey of business confidence. That's down from 91.2 percent in the February survey.

But many of the respondents simply took a neutral posture, with those expecting higher levels of economic activity over the next year dropping to 37.2 percent from 51.7 percent.

"Although current levels of confidence are high, the results indicate a return to the levels of 2003, when Hawaii's economy was ramping up to peak growth in 2004 and 2005," said Paul Brewbaker, chief economist for Bank of Hawaii.

The percentage of businesses expecting about the same level of activity during the next 12 months rose to 47.9 percent in the August survey from 39.5 percent in February.

Bank of Hawaii's survey also found that the percentage of businesses anticipating higher levels of activity within their own industries fell to 42.2 percent from 50.7 percent, while those expecting higher sales dropped to 39.9 percent from 48.8 percent.

A slightly larger proportion of respondents expected higher capital spending (36.7 percent) than in the previous survey while a slightly lower percentage expected higher employment (28.7 percent).

Businesses still are upbeat about profits, with 35.1 percent saying they expect higher profits than a year ago and 39.9 percent anticipating higher profits over the next 12 months. A total of 26.8 percent reported that they expect lower profits than a year ago while only 18.6 percent anticipate profit declines in the upcoming year.

The survey was based on 315 responses mailed to companies randomly sampled from an independent business database. The results have a margin of error of plus or minus 5.5 percent at the 95 percent confidence level.